Engineering group ABB Chief Executive Fred Kindle has quit after a clash over strategy in a shock move announced on Wednesday amid speculation over his plans for acquisitions, sending shares sharply lower.
The Swiss-based company also announced a share buyback program worth up to 2.2 billion francs ($1.99 billion) and doubled its dividend, unveiling results a day early that beat even the most optimistic estimates, in part due to tax benefits.
"Fred Kindle is leaving the company due to irreconcilable differences of opinion about how to lead the company," the group said in a statement. Chief Financial Officer Michel Demare will serve as interim CEO.
Shares in the company fell 5.1 percent.
"Fred Kindle is probably the most successful CEO in ABB's history and for him to resign during ABB's most successful trading period will be a shock to the market," said analysts at Citibank in a note to clients.
Kindle was admired by analysts for restoring growth and stability to a global group that was on the brink of collapse due to heavy debt.
"We had a high level of confidence in CEO Kindle that he would make the right decisions on acquisitions and his departure now creates substantial uncertainty," analysts at bank J.P. Morgan said in a note to clients.
Investors have long sought clues as to how ABB, which is benefiting from a boom in electricity generation, plans to spend cash reserves as speculation mounts about plans to grow through acquisitions.
Kindle has long held that large takeovers were not on the cards, in part due to the high price of assets, and analysts have speculated the group would target bolt-on buys worth $1.5 billion to $2 billion instead.
The company, which sells equipment to utilities and to oil and gas companies, is thought to have cash reserves of around $5 billion.
ABB's fourth-quarter net profit rose to $1.8 billion, beating the highest estimate in a Reuters poll of 19 analysts, as it benefited from a positive impact from tax assets.
Orders received rose to $8.9 billion from $7.5 billion in the year-ago period and revenue rose to $8.7 billion from $7.2 billion in 2006, with both figures beating the average estimates in the Reuters poll.
ABB is benefiting as Europe and the United States are replacing ageing power systems, while rapid economic growth in emerging economies is forcing countries such as India and China to invest heavily in power infrastructure.
The group said its net profit figure included the gain on the sale of its Lummus Global unit of $530 million as well as a positive impact of $475 million from the recognition of deferred tax assets.
Shares in ABB have fallen more than 16 percent this year on concerns about the cyclical exposure in the group's automation products unit. Its share price fall is roughly in line with that of rivals Germany's Siemens and France's Schneider.